Airline's ex-CEO calls suit an 'attack'

By Dan Nakaso
Advertiser Staff Writer

The former CEO of Hawaiian Airlines yesterday denied the key allegations in a lawsuit filed in November by Hawaiian's bankruptcy trustee and called it a "vitriolic attack ... riddled with inconsistencies."

Yesterday's response from John Adams, AIP LLC, Airline Investors Partnership L.P., and Smith Management LLC denied allegations by trustee Josh Gotbaum, who is trying to regain $28 million that he says was improperly diverted from Hawaiian.

Hawaiian filed for Chapter 11 reorganization in March and has been operating under Gotbaum's direction since his appointment by the federal bankruptcy court in July.

Hawaiian Holdings Inc., the airline's parent company controlled by Adams, is not part of the bankruptcy.

In his response, Adams mocks Gotbaum's lawsuit and calls it "permeated with hypocrisy."

Gotbaum, according to Adams' response, "intimates that Mr. Adams' compensation of $600,000 per year for his services as chairman and CEO of Hawaiian was excessive... On the other hand, (Gotbaum is seeking) ... compensation of $840,000 per year — plus a large success fee — to provide 'services comparable to the chairman and chief executive officer' of Hawaiian."

At the center of Gotbaum's lawsuit is $25 million that was part of a stock tender offer made in 2002. Adams and other Hawaiian shareholders received $17.1 million and company insiders were paid another $3 million for consulting services and other compensation.

The tender offer was based on sound business advice from counsel, financial experts and Hawaiian's chief financial officer, said Margery Bronster, the former Hawai'i attorney general who is representing Adams in the lawsuit.

"What the trustee demands is clairvoyance," Bronster said. "He's using his 20/20 hindsight ... It's not his job to spin tales or engage in name calling. What he really ought to do is get to the facts and get rid of all of this storytelling."

In a statement, Gotbaum reiterated that he filed the lawsuit after concluding that Adams had caused more than $20 million to be improperly diverted.

"It's not surprising that Mr. Adams claims otherwise; he wants to keep the millions he took," Gotbaum said. "Who is right, of course, is for the court to decide."

Adams seeks a jury trial and asks that the lawsuit be moved out of the jurisdiction of the federal bankruptcy court.

Reach Dan Nakaso at 525-8085 or dnakaso@honoluluadvertiser.com.